What to Watch Out for When Choosing a Real Estate Agent

ShutterstockInterview three or four real estate agents to find the one who is the best fit for you.By Teresa Mears

The proliferation of online real estate information makes it easier than ever to be an informed consumer when buying or selling a home. Yet the digital revolution has done little to lessen the importance of choosing the right real estate agent to work with you.

The right agent can help you buy your dream house or sell your existing home quickly. The wrong agent can botch the transaction, leaving you with egg on your face and nowhere to call home. Despite the%VIRTUAL-pullquote-"If it doesn't start out feeling good at the beginning, it's probably not going to get any better."% high stakes, many buyers and sellers give little thought to choosing an agent, whether they're buying or selling.

"They get dazzled by these great listing presentations," says Michael Soon Lee, regional manager of Better Homes and Gardens Mason-McDuffie Real Estate in Walnut Creek, California, who likens the relationship to dating. "It's a longtime, intimate, trusting relationship. If it doesn't start out feeling good at the beginning, it's probably not going to get any better."

Get recommendations from friends and relatives, and see which agents are buying and selling the most homes in your neighborhood. Read online reviews, but realize that they don't tell the whole story, since most clients, satisfied or dissatisfied, don't write reviews. Interview three or four agents to find the one who is the best fit for you.

Most real estate agents are independent contractors who are paid a commission based on the number of homes they sell. The commission, paid from the sales proceeds, is usually split equally between the listing agent and the selling agent. Once the deal is closed, each of those agents usually has to pay a share to the broker who owns the office where he or she is affiliated.

Don't be afraid to ask questions about how many listings the agent has, how many homes she has sold in your area, how often she will communicate with you -- and in what format -- and who she will represent in the transaction.

If you're a seller, ask how the agent will market your home, who the target buyer is and how he will get your home in front of those preferred buyers.

If you're a buyer, ask how often the agent will send you listings and whether he has worked with other buyers in your situation. A transaction involving a Federal Housing Association or VA loan, for example, includes some steps that aren't required for a conventional loan. Some buyers may want to sign a buyer-broker agreement, agreeing to pay a share of the commission if the agent shows them homes where the seller won't pay a commission, such as for-sale-by-owner houses or new construction properties.

Here are nine red flags to watch for when choosing a real estate agent:

The agent suggests the highest price for your house. If you're selling your house, get listing presentations from at least three agents, who will tell you what comparable homes have sold for and how long they take to sell. The agents are all looking at the same data, so the suggested listing price should be close. Pricing a home too high at the start often means it takes longer to sell and ultimately sells for less. "If you're too high for the market, buyers will not even look at it because they know you're not realistic," says Lee, the author of eight books and a frequent speaker at real estate conferences. "The longer your property sits on the market, the more people are going to think there's something wrong with it."

The agent does real estate on the side, part-time. Whether you're a buyer or seller, you want to choose an agent who is actively following the market every day. If you're buying, you want an agent who can jump on new listings and show them to you immediately. If you're the seller, you want an agent who is always available to show your home to prospective buyers.

The agent is a relative. Unless your relative is a crackerjack full-time agent who specializes in your neighborhood, he or she is unlikely to do as good of a job as another agent. That can breed resentment, as well as derail your transaction.

The agent doesn't know the real estate landscape in your neighborhood. Finding a neighborhood expert is especially important in areas where moving a block can raise or lower the value of a home by $100,000. An agent who specializes in a neighborhood may also be in touch with buyers who are looking for a home just like yours or sellers who haven't put their home on the market yet. "It's really a very local business," Lee says.

The agent charges a lower commission. In most areas, commissions are traditionally 5 to 7 percent, split between the buying and selling agent. If the commission on your house is lower, fewer agents will show it. This doesn't mean you can't negotiate a slightly lower commission if one agent ends up both listing and selling the house. Some newer companies rebate part of the commission to the buyer or seller, but don't use that as the sole reason to choose an agent. That's only a bargain if the agent is otherwise a good fit.

The agent's face shows up with online listings. The agents' faces are there because they paid to be there. They may or may not be the best choice for you. Don't accept the online portal's assertion that the agent is a neighborhood expert. Interview him or her yourself and find out.

The agent doesn't usually deal with your type of property. If you're buying or selling a condominium, don't pick an agent who rarely sells condos. If you're looking for investment property, find an agent who traditionally works with investors. Many agents have multiple specialties, but you want to make sure the agent is well-versed in the type of transaction you're doing.

The agent doesn't usually work with buyers in your price range. Some agents specialize in homes of all types in a specific area. But if you're a first-time buyer looking for a $200,000 entry-level home, you are unlikely to get much attention from an agent who mostly handles $10 million luxury listings.

The agent is a poor negotiator or fails to keep up with details of the transaction. In many cases, the most important work of an agent is not to find the home but to make sure the sale closes. That includes making sure the buyer is preapproved for a mortgage, the home is free of liens before it goes on the market, the appraisal is accurate and issues raised by the home inspection are resolved.